| NJ5 said: That's not what I said, and it's not what I believe. I'll explain again. By doing a price cut, you're not just increasing sales and taking a loss on those additional sales, you're also getting less money from the customers who would have bought the PS3 without a price cut. In my example, that number was 9 million (feel free to replace with whatever sales you think PS3 will have this year if no price cut is done). With a price cut, these 9 million will still buy the PS3, but each of them will give $100 less money to Sony. Resulting in a total of almost $1 billion, which is the money lost on hardware sales to those users. The 3 million who buy the PS3 because of the price cut have to make up for that loss, to the tune of $333 each in this scenario. I'm not even counting the losses on those 3 million consoles here since I don't know the manufacturing price... That's how a cost/benefit analysis is done (although a rough one). You have to look at the two scenarios, with and without the price cut and see how much money is lost or gained in total. The additional users have to pay for the cost of the whole price cut, not just the cut on the consoles they buy. |
Not entirely true, since the 9 million who would by the console anyway would probably spend some of their extra money on a game or accessories. Let's say they would spend 50$ of the 100$ "saved" on Sony. That means that the 3 million new customers should make up only 183$ each.
